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Energy firms cleared for oil-shale research

Next phase will require environmental analysis of plans

Nominations by all three companies that applied for a second round of federal oil shale research and development leases have cleared an initial review by the Bureau of Land Management Washington office.

Nominations by ExxonMobil Exploration Co. and Natural Soda Holdings Inc. for lands in Colorado and by AuraSource Inc. for a parcel in Utah now will undergo National Environmental Policy Act analysis by the BLM Colorado and Utah offices.

That analysis could take anywhere from four to 18 months, the BLM said in a news release Wednesday.

It also is likely to be controversial, judging by initial reaction Wednesday by conservation groups that object to issuing the leases, including to ExxonMobil, which left thousands of people out of work when it ended its oil shale project in the Parachute area in 1982.

“When Exxon pulled the plug on their $5 billion gamble and laid off 2,200 workers, the West learned a bitter lesson. The last thing we need is another pipe dream and another economic bust,” Craig Thompson, a former oil shale worker and researcher and current chairman of the National Wildlife Federation board of directors, said in a statement released Wednesday.

Said ExxonMobil spokesman Patrick McGinn, “We plan to take a careful, phased approach to evaluate this technology thoroughly over several years before making any decisions on commercial projects.”

The BLM said a review team including the governors of Colorado, Utah and Wyoming; the Department of Energy; and the Colorado School of Mines recommended the nominations be advanced.

BLM Director Bob Abbey said in the news release, “The BLM is committed to careful consultation with all affected stakeholders in the oil shale process, including states, counties and tribes. The analysis that our states will now conduct will help us chart a wise path for western shale oil resources.”

Companies were invited to propose federal parcels not exceeding 160 acres for research, development and demonstration projects under 10-year leases. Applicants could identify as many as 480 more acres for a potential commercial lease.

Research and development leases issued during a previous round provide for potential commercial leases of 4,960 acres.

Shell holds three of the previously issued research and development leases in Colorado, and Chevron and American Shale Oil LLC hold one apiece. All of the leases are in Rio Blanco County. Oil Shale Exploration Co. holds one lease in Utah. None of those companies have been issued commercial leases.

Opponents of oil shale development say not enough progress has been made on existing leases to warrant more. They also contend it would require large amounts of energy and water to produce oil from shale, and relying on shale as a fuel source would pollute the air and result in more greenhouse gas emissions than conventional fuels.

Bobby McEnaney, lands advocate for the Natural Resources Defense Council, said the Obama administration “is making smart decisions by investing in clean energy that will create jobs and reduce our dependence on oil. Oil shale undermines that effort.”

Said Abbey, “To determine whether oil shale will be a viable energy source on a commercial scale, we need to support critical research to answer fundamental questions about the feasibility of the technologies, their impacts on the environment and local communities, and their use of water. This second round of leases will help us answer those critical questions so that we can chart a safe, orderly and responsible path for our energy future.”

ExxonMobil is pursuing what it calls Electrofrac technology, which involves fracturing oil shale “in situ” or in place underground, filling fractures with conductive material and then heating the shale with an electric charge.

“ExxonMobil supports the government’s efforts to advance oil shale development and is committed to fully testing the viability of our Electrofrac technology for commercial application,” McGinn said. “We are progressing field tests, and we remain interested in securing leases best suited to in situ oil shale R&D.”

ExxonMobil and Natural Soda applied unsuccessfully for leases during the BLM’s first round of leasing.

Natural Soda is a major producer of baking soda, with a Rio Blanco County plant where it injects hot water into deposits of nahcolite to produce sodium bicarbonate. It hopes to use its experience in directional and horizontal drilling to pursue new technology to develop oil shale in place underground.

AuraSource wants to develop mined oil shale using technology tested on coal in China. The method involves using a catalyst to process oil shale at lower temperatures than competing technologies. The company hopes to build a refinery that could process as much as 1 million tons of oil shale a year, possibly in eastern Utah or western Colorado.